Law firms buoyed by revenue spikes despite turbulence

A lower Australian dollar and increased Chinese and US interest in the local economy has buoyed law firms.

A suite of global firms with an Aussie presence reported jumps in their worldwide revenue for the year, showing they can still pull between $US500,000 ($700,000) and $US1.5 million per lawyer. Firms are confident that growth is picking up on the home front, despite the highly competitive market.

Incoming new head of top-tier law firm Allens, Richard Spurio. Louie Douvis

"The UK election result, the renegotiation of Greece's debt, for now, and the resurgence of the US economy are all positive developments.

"The Australian market is competitive but has picked up considerably with the lower Australian dollar and increased Chinese and US interest in investment in Australia."

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Data on some of the top global law firms with an Australian presence collated by UK-based legal research company Legal500 shows that profit per equity partner stayed above the $US1 million mark for most; ranging from around $US1.1 million for Allens and Clyde & Co to nearly $US5 million and $US3.7 million respectively at US heavyweights Quinn Emanuel Urquhart & Sullivan and Sullivan & Cromwell.

Profit margins sit at around the 30 per cent mark for most, according to Legal500.

Downturns and spikes

While some firms had a relatively stagnant year or experienced slight downturns, others saw spikes: Allen & Overy, which has anecdotally struggled in the local market, was up 11 per cent globally to $US2.1 billion; Clyde & Co leapt up 14 per cent to $US651 million and Quinn moved to $US1.1 billion, up 13 per cent. Squire Patton Boggs was up 12 per cent, to $US870 million.

While some have a full-service model that demands a big footprint – like Ashurst and Herbert Smith Freehills, which had increases of 2 per cent and 7 per cent respectively – others have a strong focus such as Clyde & Co in insurance and construction.

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"It's interesting watching a number of the firms come out and talk about sector focus," Mr Edmond said.

The former Allens partner said that the large footprint firms would "never move away from banking and finance or project finance", which were essential, but expressed surprise that some seemed to be moving away from litigation, which was a source of revenue growth.

"Anyone can grow revenue – you've got to look at profitability as well," he said.

Allens is among the nation's biggest law firms that has remained independent, but following its brand alliance with magic circle firm Linklaters in 2012 it appears on the global list, despite not having financial integration.

According to the Legal500 data, its global revenue fell by 15 per cent in 2015, to $US414 million, although profit per partner remained above the $US1 million mark.

'Beneficial partnership'

Allens partner Niranjan Arasaratnam said that the alliance had been an "extremely beneficial partnership" for the two firms and for clients.

The alliance placed it well to deal with the market disruption in the legal profession, he added.

"It gives us a fluid and nimble model that can adapt and effectively shape-shift in line with what our clients require. We are not wedded to one offering."

Despite rumours to the contrary, Mr Arasaratnam said that Allens had never been "locked out" of a deal due to conflicts of interest from its alliance with Linklaters.

"Conflict situations have been extremely rare. They are inconsequential when considered against the large number of referrals and other opportunities the alliance has provided."

The expansion of global firms continues despite market uncertainty. This week, Allen & Overy opened an office in Seoul, South Korea, in a bid to expand its offering in projects, capital markets, M&A and niche areas like competition law.

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